Manufacturers of electric two-wheelers in India have announced the government's announcements in the Union Budget 2019-20 to give a boost to the electric vehicle segment in India. Announcing the Union Budget in Parliament today, Finance Minister Nirmala Sitharaman announced that there will be an income tax deduction of ₹ 1.5 lakh on loans taken to buy electric vehicles. In addition, the finance minister also announced that the Goods and Service Tax (GST) rate on electric vehicles will be lowered from 12 per cent to 5 per cent to further boost adoption of EVs.
"The electric vehicle industry needed a substantial boost and support from the government and we welcome the government's recommendation of reduction of GST on EVs from 12 per cent to 5 per cent. In addition to this, income tax reduction of up to Rs 1.5 lakh on the interest paid on EV loans is an extremely positive move which will encourage customers to make a switch from ICE vehicles to EVs. Reduction in custom duty on lithium-ion cells would help local component manufacturers in scaling up the production thereby further reducing the overall upfront cost of electric vehicles in India. Government's continued emphasis on FAME II initiative and strengthening of EV infrastructure will definitely encourage manufacturers to further invest in the ecosystem thereby lowering both crude oil imports and air pollution leading to a cleaner and greener future. We are confident that such directives will boost up the rate of EV adoption in the country and will act as a catalyst in the government's aim of faster adoption of electric vehicles and higher level of localisation under the 'Make In India' initiative," said Naveen Munjal, Managing Director, Hero Electric.
Reacting to the Union Budget announcements, electric two-wheeler manufacturers have welcomed the Finance Minister's statements, saying that these measures will definitely boost electrification of the Indian automobile industry, as well as help consumers looking to make the shift to electric vehicles. The Society of Manufacturers of Electric Vehicles (SMEV) has welcomed the announcements, and says these will go a long way in the electrification of the Indian automobile industry.
"The announcements on Electric Vehicles (EVs) in the union budget 2019-2020 bring cheers to both consumers as well as e-vehicle manufacturers. To make India as an EV manufacturing hub, decision on incentivizing EV manufacturing by extending benefits under Section 35AD(1) is a move in the right direction. It will help in the creation of a local manufacturing base and encourage component manufacturers to invest in the sector. Provision of additional income tax deduction of an amount upto 1.5 Lakh rupees on purchase of EVs would encourage customers to opt for EVs. Additionally, bringing down custom duty on lithium-ion cells to nil would further cut down the cost of batteries and help local battery manufacturers to scale-up the business. The EV industry has witnessed 100 per cent growth in FY 18-19, and with these key measures announced today, we anticipate a brighter future ahead for the industry," said Sohinder Gill, Director General, SMEV.
Tarun Mehta, CEO and Co-Founder of one of India's leading electric two-wheeler manufacturers, Ather Energy has said that the announcements will definitely boost the electric vehicle sector.
"The government has already moved GST Council to lower GST on EVs from 12 percent to 5 percent and the additional income tax reduction is a major boost for end consumers to purchase EVs. It addresses the concern of the upfront cost of purchasing electric vehicles. This is the best example of a consumer driven change and is also how Ather envisions the EV sector to achieve scale and growth. It now becomes imperative that OEMs chalk out plans that allows the industry to scale up and meet the demand for compelling products," said Mehta.
Other EV manufacturers echo similar sentiments, welcoming the government's announcements to boos electrification of the automobile industry.
"The budget announced by the Finance Minister for 2019-20 will catalyse India's journey to electrification and will be beneficial for both, the e-mobility industry as well as consumers who are looking to make the shift to electric vehicles. The budget has a strong synergy with the FAME - II scheme and the announcement will generate a positive sentiment. Lowering GST rates on electric vehicles to 5% will make EVs more attractive to the buyer in the future. In addition, incentives on income tax will also increase the momentum for the sector. We welcome the new budget and trust that this will encourage faster adoption of e-mobility in India," said Parveen Kharb, CEO and Co-Founder, 22KYMCO.
"This budget has been very promising for our industry. The proposal to lower GST rates on electric vehicle from 12 per cent to 5 per cent is a positive sign and we hope to see it implemented at the earliest. The budget is an opportunity for consumers to start adopting electric vehicles. An additional income tax deduction of 1.5 lakh on the interest paid on the loans would make the purchase more affordable. This is the start of a revolution and we believe 3 years from now things will change rapidly and India will be ahead of the curve in its adoption rate", says Mr. Rahul Sharma, Founder, Revolt Intellicorp Pvt. Ltd.
Electric mobility is a reality, and from the way things stand right now, the government seems intent on pushing forward with an aggressive plan for faster adoption of electric vehicles. The government's think-tank, Niti Aayog, has already proposed a complete electrification of two-wheelers below 150 cc by 2025, and to make all three-wheelers electric by 2023. It however, remains to be seen how the automobile industry, particularly the high-volumes two-wheeler industry, will adapt and change if these deadlines are converted into formal policy announcements.